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The American's Creed

I believe in the United States of America as a government of the people, by the people, for the people; whose just powers are derived from the consent of the governed; a democracy in a republic; a sovereign nation of many sovereign states; a perfect union, one and inseparable; established upon those principles of freedom, equality, justice, and humanity for which American patriots sacrificed their lives and fortunes.

I therefore believe it is my duty to my country to love it; to support its constitution; to obey its laws; to respect its flag; and to defend it against all enemies.

Financial planner, Russ Thornton, posted a link to this Neil Boortz piece on his facebook page. It’s a comparison of Madoff’s scheme vs. the Social Security scheme. I like this graphic, which I copied and resized so it would fit on my blog:

Boortz isn’t defending Madoff. Rather, he’s showing that Social Security really isn’t any different from what Madoff did.

Anyway, I thought it was an interesting comparison. Thanks for the link, Russ.

30 Responses to “Madoff vs. Social Security: Which One’s the Scam?”

Compelling analysis. It appears that Bernie took his cues from our government. Maybe he should have run for office.

It’s interesting to note that when Social Security was formed, you could receive benefits at age 65 — but the gracious federal government neglected to mention that the average lifespan was only 67. All their projections were based on that little “unimportant” factoid.

This is incorrect. SS is not a “promise” to pay back the amount you’ve paid in taxes. It’s not an investment. It’s an *insurance* scheme. That is, you are paying mandatory insurance premiums so that in the future if you are poor or disabled you will get benefits. Just like any insurance that you buy, there is a chance the provider will go under and not give you any benefits.

Of course you might argue that a win for Madoff is that no one was *forced* into participating in it. That’s probably the only thing he has on his side though.

Yes, they are both forms of Ponzi finance, the only difference is that no one does anything about Social Security.

As a member of the younger generation, which I submit should now be known as the “lost generation”, I wish and hope everyday that someone finally has the balls to do something about this unjustifiable theft. I’m so pissed that I’ve started attending the city council meetings. Since no one there has a clue or the cohones to say anything, I’ve realized that it is my responsibility to speak out, and so I’ve begun preparing a statement for the next meeting.

The simple fact is the age of entitlements is over. Taxpayers are tapped out and over-leveraged. A secular bear market has been underway for two years now, in large part thanks to the unsustainability of programs such as Social Security. Many politicians are still touting the status quo, but the lying is finally starting to come to an end, and I couldn’t be happier.

The unions, banksters, and corrupt politicians fill this country with their rhetoric and fear-mongering. The solutions, while not black and white, are simple:

The police, firefighter, and teachers unions must take massive paycuts and the guaranteed pensions must end. Those that do not negotiate willing now will have to fight it out in bankruptcy court, where they will undoubtedly get less.

The banksters, and politicians who supported them, need to be locked up and made an example of. We can start with Paulson, Bernanke, Dodd, Frank, and Geithner and work our way down from there.

The war(s) needs to end and we need to bring the troops home now. Not next year, now! And while we’re at it let’s end the war on drugs too. It’s a failed policy decision that has done nothing but fill our prisons with non-violent offenders and ruin peoples lives. The government has absolutely no right to tell you what you can put in your body. Not only that but it’s one of the safest drugs around and has enormous medicinal value.

We need to phase out Social Security, Medicare, and Medicaid as they amount to tens of TRILLIONS in unfunded liabilities and I will not pay into this doomed-to-fail system my entire life only to receive nothing at the end.

Common sense and simple math are all it takes to see the obvious. Like “The Network”, I’m as mad as hell and I’m not going to take it anymore.

I like JT’s passion and agree with every position he takes. Stay active and bring others into the fight with you. If we don’t demand our that “our leaders” act responsibly, they never will. If we bring together a movement, they will listen.

#3 Andy,
States have guarantee funds to pitch in and take over when a company fails. Every insurance company pays into that fund and ponies up when called upon.
Governments have taxpayers, the UN, or revolution.

Almost any comparison has its flaws. So does this one. While it sounds good to compare these two schemes, these schemes are inherently different.

Madoff kept all the money for his benefit, while Social Security money is spent on stuff that conceivable benefits all of us. At least we are left with roads, education, defense, etc. when our contributions to the Social Security system are used for things other than social security.

Another difference is that the social security pension scheme is a deliberate contract between generations that was created in a democratic process. It is not a shady deal that was created by the whim, greed, and individual machinations of one individual. Unfortunately this inter-generational contract is flawed which is why many current contributors are not going to get much benefit from it.

|Andy Says: ” SS is not a “promise” to pay back the amount you’ve paid in taxes. It’s not an investment. It’s an *insurance* scheme.”|

______

Nope, it’s just a tax & spend program — NOT insurance.

The U.S. Supreme Court has repeatedly ruled that “Social Security” is merely a tax… and that benefits are paid merely at the discretion of the current Congress — with those who pay the taxes having no enforceable right to any benefits whatsoever.

Congress could legally abolish all Social Security benefits and monthly checks tomorrow — if they wanted to…. while still collecting full FICA taxes as they always did.

The Democrat Congress is quietly, but seriously considering raising the SS age limit to age 75 (for full benefits). Something very like that will happen within 5 years — it has to because the SS system is absolutely unsustainable under current rules.

Remember when Ronald Reagan forever “fixed” Social Security in 1983 by initiating heavy income taxes on SS benefits !
The next ‘fix’ will be spectacular.

I understand. That is a common concern that I hear frequently and one that I can personally related to. I grew up in the 80’s where marijuana was absolutely demonized, and believe me when I tell you, that propaganda scared me straight. I never wanted to know someone who smoked it, much less use it myself. And I believed that up until a few years ago, when I finally realized that I had been lied to my entire life.

So, I started learning about the effects of cannabis and the history behind it’s prohibition. I discovered that cannabis has been used for thousands of years, and is a major part of many cultures, including our own.

The non-psychoactive part of cannabis, hemp, has thousands of uses and was predicted to become a billion dollar industry by Popular Science in the early 1900’s, before it became illegal. It makes some of the most durable and soft clothing, strong time-tested paper (the first two drafts of the constitution were written on hemp paper), and it’s seeds are a great, healthy, and nutritionally beneficial supplement for the human diet.

However, you are probably more concerned with the psychoactive part of the plant. That too has numerous reasons for being legal. While the burden of proof should really be on the people who want to make it illegal, I will still offer some sound reasons which advocate a change of it’s legal status.

First and foremost, cannabis has never been directly responsible for the death of any human being, ever. It’s ID50 is so astronomically high that it is virtually impossible to overdose on the drug. Additionally, new studies are finding that cannabis, unlike cigarettes, does not cause lung cancer. It’s still not perfectly safe to smoke it, but that has more to do with the fact that you are inhaling combusted plant material than anything else.

Secondly, cannabis is being found to help cure or alleviate the symptoms of a variety of diseases and ailments. There are reports of it being used to treat glaucoma, Multiple sclerosis, anxiety, depression, and as a general purpose analgesic. Not to mention it helps with eating food for Chemotherapy and AIDS patients, suppressing nausea and vomiting as well. Check out Wikipedia for more info.

However, even if it provided none of those benefits, it should still be legal for the simple fact that a person’s consumption of the drug does not directly and adversely affect the well-being of someone else. Adults should be allowed to use it as much as they are allowed to smoke cigarettes, drink whiskey, or eat a steak.

JLP, I strongly encourage you to check out the movie “The Union”. I watched it last night on Netflix and found it highly informative and entertaining. It offers a great behind-the-scenes perspective into the drug industry as well as exposing many of the myths surrounding cannabis.

Keeping an open mind and learning more about this fascinating plant has been one of the most enlightening experiences of my adult life. I hope the information I have shared with everyone is valuable and makes you question your beliefs as much as it did mine.

“The police, firefighter, and teachers unions must take massive paycuts”

If anything, these professions need pay increases. Arguably, teachers are the most important professionals in the country. Increased pay will attract more talent to a profession that is in dire need of top talent. Police and firefighters put their lives on the line everyday. I don’t want either responding to a call to my house by saying “nah, I don’t get paid enough to put myself in danger today”.

I do agree that pensions need to end. Give them a matched contribution into a TSP type program. It’s an individual’s responsibility to save for their future.

I don’t agree with bringing the troops home now, but that’s for another debate.

The war on drugs is no more effective than Prohabition was. It only created an undergound supply for liquor. Gangs ran this business and made millions in profits while the government spent millions trying to stop them. As for the lives that are ruined by drugs, what about the lives that are ruined by alcohol? Many federal prosecutors and judges are in agreement that drugs should be decriminalized.

Pay increases? What state do you live in? Here in New York I have two aunts, both whom makes $90,000 a year!!! One teaches fifth grade and the other, first grade. “Top talent” is certainly not required for either, as they are little more than glorified babysitters with kids that age. Additionally, $90,000 is well above the median income for the state and the country. Their pay is unjustifiable, and on top of that, they have crazy benefits and pensions through NYSTRS.

If these professions are in such dire need of top talent then we should do the best thing to promote that by privatizing education, police, and fire services. If we don’t break up the unions, at least make them compete with others so we can get the best “talent”.

As for this remark: “nah, I don’t get paid enough to put myself in danger today”; it’s drawing a false conclusion and a logical fallacy. Have you never heard of volunteer firefighters? Just because they don’t get paid, doesn’t mean they don’t show up!

Furthermore, volunteer firemen are more proof that top talent is not required. Common sense, courage, and training are all that is required. I’m not saying they don’t put their lives in harms way, but let’s not glorify them anymore than necessary.

Who actually thinks that the SS-taxes you pay today are being ‘invested’? SS has never been run that way. The SS-tax surpluses only are invested in special US treasuries. SS has never run a yearly deficit (yet), it has always collected more in SS-tax than it has needed to pay out.

The only scam with SS is that we’ve been using the SS-tax surplus to pay for non-SS things (wars, tax-cuts, etc).

If anything, it is the SS Trust Fund itself that might potentially be scammed here — not that SS is doing the scamming.

As long as the US taxpayers repay the nearly $3 trillion it owes the SS Trust Fund, then everything will be fine. If any administration defaults on the $3 trillion obligation the SS-Trust Fund is owed, then that will be an epic scam — making what Bernie did look like small potatoes.

Amen, JT! I might have to bookmark this blog just to read more of your posts. I agree with everything you said.

On the drug war, I really don’t care whether drugs “ruin people’s lives.” Grow up, people. There are lots of things that ruin people’s lives. Figure it out for yourselves, and don’t do those things. Getting married and having children ruins a lot of people’s lives, but we don’t make those things illegal, do we? What about eating too much, or not exercising enough? More nanny state laws? Sheesh.

Regarding social security, I am irritated by the seemingly widely-held belief that SSI is the only thing keeping most old people from a cat food diet. Age is by far the strongest correlator to wealth in the USA. These geezers have plenty of money – they just never have to use it, because their needs are met by the younger generations, who will have to work until they’re 90. If it’s been 15 years since you got back everything you ever paid into SSI, yet you’ve been drawing $2K a month ever since, where do you think the money comes from? Are you entitled to a 25-year retirement through no effort on your own part? Unbelievable. What a welfare queen mentality.

And I don’t really care whether 70% of Americans have no financial sense. Too damn bad. Get a clue and learn these things. If you reach adulthood and don’t know how to balance a checkbook, then your parents and school have let you down, but you are an adult and will just have to figure it out for yourself. Young people are just starting out and they are getting hosed by SSI. Old people have had their entire lives to prepare for the time when they could no longer work. I would love it if a leader came forward and said outright that they want to end SSI and Medicare. No apologies, no backpedaling. I’d vote for them in a heartbeat.

Oh, and speaking of Medicare, if you’ve never earned $2 million in your life, but you still want to have $2 million spent on your hospital bills during the six months it takes you to die, where do you think that money comes from?

This rant has been brought to you by the letter T, and by the number seven.

The Old Age Pension function of Social Security was never, ever designed as an insurance program and it still isn’t.

An insurance program takes in enough money to cover expenses of running it and paying benefits, and invests the excess to reduce premiums.

Social Security is a transfer payment between younger workers and older retirees. The system pays out much more money than it takes in. The so-called Trust Fund was designed as a stop-gap measure. Excess funds are put into special Treasure certificates at a fixed low interest rate. Some investment. Congress has used all this up. The so-called Social Security lock box during the Clinton administration was a lie. As long as the money was put into the Treasury, it was going to be used. Either Congress uses that money directly, or borrows against it, instead. Where is Congress going to get the TRILLIONS AND TRILLIONS owed by the Treasury to the Trust Fund? Either by borrowing again, or by raising taxes.

The other Social Security functions, like Survivors, SSI, SSDI, Disability were all added later, but premiums weren’t immediately changed to account for those added costs.

I’d just like to put in a good word for Social Security-the budget challenge in this country is not social security, its medicare, and that is because health care costs are skyrocketing. That’s why universal health care is a good idea-all of the countries with universal care spend half as much money for the same quality of care.
I’m glad to be paying taxes into social security, medicare, medicaid, and that teachers, police officers, and firefighters are paid a reasonable wage.
On the other hand, I’d be happy to see people who produce nothing useful, like investment bankers, taxed at a huge rate, and to see the war on drugs and the wars in Iraq and Afghanistan brought to an end.

@JT
I love the debate about cannabis. People want it legalized for what? As far as using hemp, you are allowed to use hemp. I see hemp products every where. As far as using it for medical reasons, that is absurd. You state “unlike cigarettes, does not cause lung cancer.” Where is this study? No matter what you smoke, it will be inhaled and it will irritate your lungs. As far as “treating” glaucoma, Multiple sclerosis, anxiety, depression. It doesnt TREAT anything, it just helps with the symptoms. And for those symptoms there are far better drugs. And if you still believe that marijuana will do the trick, then you can have marinol, which is a pill with the active ingredient from marijuana.

If you want to argue it is a waste of tax payer money…etc. Thats fine, but please dont think that it has any good medicinal use. Plus once it becomes “Medicinal Marijuana” how much mark up will the big pharm companies put on it. The FDA will make sure to not allow you to grow your own. Just like they dont allow you to grow any opioid plants (that where many pain killers come from) also where heroin comes from.

It is interesting to read the 25 comments above. I agree with most of them. If you go back and look at the original law it was a an insurance policy, however, the surplus monies were supposed to go into the “trust fund” and be invested and remain there to pay future social security payments as people became eligible. Had this been done the system would not be basically bankrupt today.

But starting with LBJ the system was tinkered with so that the funds would become part of the General accounts of the federal government and used to do what Congress wanted to do. The government(Congress)was supposed to develop a plan to repay the IOU’s, which never happened.

So once again we have the democratic party leadership in Congress doing their usual slight of hand based on the fact that they have a “situational ethic and a flexible integrity” which they always use to get out the tight situations they have put the country in.

This sound very much like what is happening today with the Medical Reform legislation – a program that will surely bankrupt the country within a few short years.